Finance Committee on Sept. 26th, 2012

[Stephen Ashworth]

I think all of us...we do meet on a regular basis, as Mack mentioned, through the Financial Literacy Action Group. That was our way of making a statement that six NGOs can come together and see this as an important opportunity to act in a coordinated manner.

With regard to enshrining this in the bill, perhaps it comes down to the nomenclature. When we talk about a financial leader, I see a financial coordinator. I think leaders are really the existing resources that you have in the field. My colleagues do fantastic work, and we work together and no one owns that space. It's a collaborative effort to help extend...not just for students, but for adults and new immigrants coming to Canada. So we fundamentally support 100% this individual, this position, and the necessity to have it.

Our demand outstrips our supply five to one. I would encourage you to say that beyond just the appointment we need to look at the significance of the need to actually reach Canadians across the country, and we may need to work out the logistics, we may need to have a job description down, but we need to recognize the coordinated efforts across the country of those who've been working for many years. And that individual shouldn't duplicate resources and should understand the importance of working with the organizations. With my invitation today I commend you and thank you for the opportunity to be here. I think that's absolutely essential.

Thank you.

[The Chair, Conservative, James Rajotte]

You have ten seconds.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

In summary, it sounds as though every witness here today is very supportive of Bill C-28 and...being part of the Financial Consumer Agency of Canada and enshrining that as per the recommendations here.

[Gary Rabbior]

Very briefly, I would support it, because I'm not sure that the FCAC is currently providing the leadership that's needed, and I think a leader housed there could provide greater focus on the kind of national leadership that we would welcome.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you to each of you for joining us today.

Gary, your organization, CFEE, is already working with provincial ministries of education, financial services sector players, including banks, as well as foundations and media organizations, which all deliver programs in support of financial literacy. Given your existing infrastructure—and the government does provide some level of support to your efforts—wouldn't it make more sense just to increase your budget as opposed to creating a new bureaucracy? I'm just curious.

[Gary Rabbior]

Isn't that a nice thought? I'm very tempted to respond positively to that, but I'm cautious about doing so. We're funded entirely through projects. We are an entrepreneurial organization. We challenge ourselves. We actually get no sustaining money. I'd be delighted if that would change and the government would provide some support to us, but I'm the first one to recognize that the job is so big and there are so many, and apart from what we each individually do.... I aspire to a vision for this country. I wish we had more collective activity to carve out a vision for what we're trying to do as a nation. I like and I welcome people with vision to bring together and mobilize people behind something they all want to do together.

We each do our own job and we go about it in our own way, and we do it well, but it doesn't create that kind of vortex that you get caught up in that motivates you and keeps you going and works to the collective good and deals with.... You know, there are people doing things for other people that we aren't attending to, so as much as I'm tempted to say, “Yes, let's go that route”, I still would very much welcome work at the national level to provide that kind of vision leadership, if it's done in the right way. If it's competing with what we do, we don't need that. If it's supporting what we do and helping us to do that better, I'm all for it.

[Scott Brison, Liberal, Kings—Hants, NS]

I guess that's the advice any of you might provide to the financial leader or to those charged with making a job description for the financial leader. It's very important that we avoid overlap, duplication, redundancy, waste, confusion, and an unclear mandate as we seek to achieve synergies and greater coordination. Any advice you could provide the committee would be helpful, if you would agree to. This is not something you can answer in two or three minutes, but you may have some ideas on how to avoid that duplication and achieve those synergies.

Much of what you've discussed is in the area of education, and much of that responsibility—not all, but much—is provincial. To what extent does it require the federal government, the federal ministers, to work closely with provincial governments going forward on this in terms of designing, among other things, a curriculum—that is optional, of course—for provincial departments of education? Would that make sense, that we seek to develop a curriculum that ultimately is optional but is available to departments of education regarding the whole area of financial literacy?

[Stephen Ashworth]

Junior Achievement and many other organizations currently are cross-jurisdictional in terms of provinces. Junior Achievement has had this ongoing relationship for over 58 years. In the presentation we did with the federal literacy task force, I encouraged focusing on those things that are in common versus those things that are different. We are very familiar with CMEC, the Council of Ministers of Education. With the greatest respect, I would suggest it is an example of what we don't encourage.

We have relationships in the provinces—and I'm speaking not just about Junior Achievement but about other NGOs—and I truly think that because it is a provincial jurisdiction, it becomes absolutely fundamental to understand that a lot of those issues have been ironed out for those organizations that cross provincial boundaries from coast to coast. I think it's actually not something you need to revisit. You just need to have an awareness and speak to those NGOs who have the distribution across the country. I think it is important. We're in 123 countries, so doing this across Canada is not challenging.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much. That was helpful.

[The Chair, Conservative, James Rajotte]

Go ahead, very briefly, Gary. You have ten seconds.

[Gary Rabbior]

We have worked with the three western provinces on that very thing to identify the areas of knowledge, skills, and behaviours that they aspire to in their curriculum. We work with each one to tailor it differently, but it's already in place. I do believe there are opportunities for the federal government at the provincial level.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

We'll go to Mr. Van Kesteren, please.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Mr. Chair.

Thank you for appearing here with us this afternoon. It's a very interesting conversation, and I'm very pleased that you are going to participate in something that's very important to us.

I'm curious, though. We had a little conversation just before we got started. I remember a little while ago we had the bankers here, and I suggested that one of the reasons Canadian banks have done so well is that we have a tradition of good Scottish banking. At the risk of getting into trouble for saying things like that, I come from a Dutch background, so I understand those things.

I'm thinking that maybe you could answer a question for me. When did this start? We've gotten into trouble—and I think it was in the seventies possibly. Something changed in our values and our value systems.

Gary, maybe you can just elaborate. When did we get to this idea that we could just borrow and borrow and borrow? We talk about individuals, but it's governments as well. When did that start to happen? When did that shift take place, in your estimation?

[Gary Rabbior]

I think you're right. The savings rate in Canada peaked in the early 1980s at just over 20%. Just before this crisis, we were at zero.

So something happened between the 1980s and recently in terms of the mindset about how one handled their financial affairs; access to debt and credit and their ability to take it on; people's familiarity with the options presented, including multiple credit cards; debts on houses and home equity loans; and just the facility and capability of people to take on debt, pressured by lifestyle.

They're finding right now, for example, that young people, when they leave home, no longer feel they have to wait 15 years to live the lifestyle of their parents. They live it now, and they access debt and credit to try to do so. The pressures on borrowing have just escalated and escalated over these last few decades, to the point where people have access to it and nobody sets limits on them, or at least reasonable limits. They can get themselves in trouble, and then the whole question is, how do you dig out of it? Usually you dig yourself deeper trying to get out.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you.

I read recently that one of the greatest areas of concern around debt and indebtedness is the 50s to 60s age group, which is shocking, because that's the time in life when we should be coming out of debt and saving.

I guess where I want to tie this together is that it's kind of like the question of what comes first, the chicken or the egg: was it governments that first started to maybe initiate this type of a process or was it the general population?

The follow-up to that question, and I leave this open to anybody, is, how important is it for governments to get a grip on debt themselves? We've taken it upon ourselves as the federal government to eradicate the deficit and to start to build down that debt. How important is that and to get that message across to Canadians so that it will kind of trickle down to the average household as well?

[Gary Rabbior]

I did a presentation last week for a group of young people, and I had to inform them that right now more than $600 billion in debt will be transferred to them unless this current generation does something about it.

I think the whole notion is that the group you're talking about, the group in their 50s and 60s, the sandwich generation, is increasingly stressed They're having to care for parents who are outliving their good health, and are having to be stretched to take care of them at the same time as they're paying higher costs to get their kids through school.

If you look at that generation, the demands upon them are extraordinary. People did a horrible job of creating appropriate expectations for this generation. We were supposed to be working three days a week. We were supposed to be retiring at 50. What has happened is that all their expectations and hopes have been confounded, and yet they have still tried to obtain them. They have sought ways, through debt, to live in houses they couldn't afford, to borrow to put kids in schools they couldn't really afford, and beyond it, because that was the way it was supposed to be. Now they've caught themselves not well prepared for retirement, having to care for their parents and having kids come back to live at home.

If you want to look at one generation that is really anxiety-prone and stretched, it's that generation that you've identified. And sure, government has the same kinds of challenges. How will it attend to the needs of this generation, which are exploding at the same time as the level of indebtedness is handicapping what it can do?

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Fair, you wanted to make a comment?

[Adam Fair]

Yes. I would just add a little bit of context and say that it's something we see every day—just the ability to afford the things that we all appreciate, to be able to send your kid to school, to be able to afford your own home. A lot of those things are becoming unachievable, and people are finding ways to attain them through debt.

People leaving school now can be strapped with $50,000 or $60,000 in debt, with pretty shoddy prospects of getting a decent job that will help them pay that debt down. That follows them through and pushes everything later in terms of their ability to pay down that debt and put down a mortgage for their next house.

I think there is a generational thing going on here, but there's also a cost of living that is really making paying for these essentials quite challenging for a lot of people. A lot of people are using debt in order to achieve those things, because that's the way we do things. We take a loan to go to school. We take a mortgage. We take a loan for a car. It's the way that is normalized now. And that credit is available.

It's a challenge on both fronts, affordability and also access to credit. I would agree that there is a cultural element to it as well.

[The Chair, Conservative, James Rajotte]

Great. Thank you very much.

We'll go to Ms. Nash, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

Good afternoon to all the witnesses. Thank you for being here. Thank you for the work you do.

We've had a couple of discussions about financial literacy in different forums. We, of course, supported the task force and its 30 recommendations. The chair of this committee, Mr. Rajotte, had a motion on financial literacy that we were supportive of.

We've been critical of this bill because it took the first recommendation about creating the financial literacy leader but didn't bring any of the other recommendations from the task force report. The FCAC does terrific work and award-winning work, including work on financial literacy, but our concern is that this leader will be there, as my colleague said earlier, without terms of reference and without a very clear mandate. With that kind of openness, perhaps you're able to achieve things and perhaps not.

The statement was made earlier that we should enshrine the leader in law. We do support that, but we're wondering whether you also agree that another recommendation, which was to enshrine the advisory council in law, would be a good step as well, to make sure that those of you who are experts in the field of financial literacy are there to guide and provide ongoing support for the leader when he or she is in place.

That's for any one of you.

[The Chair, Conservative, James Rajotte]

Mr. Rogers, would you like to start?

[Mack Rogers]

Yes. I'd like to say that I understand where you're coming from with that question. If we could flip a switch and all the task force recommendations could pass in the first day, that would be fantastic.

I think the way we're looking at it now is that we first need to establish the leadership, as the first step, because that's where the advisory council and all the other pieces are going to come from. We're going to be joined as a country, as groups of organizations, as people who are potential advisers to the leader; that's where it's going to be centred. So establishing the FCAC and the financial literacy leader is really the first step, we believe, in making it all the way through the list from the task force.

[Gary Rabbior]

I would say that I don't know the politics of it all. Does it make sense to have a leader with an advisory group to draw upon the expertise that exists in this country? For sure. Do you have to enshrine that to make sure it happens? I don't know.

If you were to pick a leader for this job who didn't do that, I would think you had picked the wrong person. But I don't know whether there's enough uncertainty about whether this is the kind of leadership that would be provided such that it should be stipulated as something that is an obligation. I think that if any one of us were put in that job, the first thing we'd be doing is getting on the phone and putting together an advisory group.

So here's what I would say. Is it essential? Yes. Does it need to be enshrined in the bill? I don't know.

[Stephen Ashworth]

I'll just quickly comment. I would not know some of the details in terms of the advisory composition you might be putting forward. Certainly, as a national and international organization ourselves, we always have advisory committees.

To Gary's point, one of the things that we think is fundamental to this is the fact that we want to see the beginnings of something that we see as fundamental for Canadians. We want to demystify the whole financial literacy nomenclature and make sure that every Canadian understands this, actually has access, and isn't intimidated by something. This is why those people, whether it be an advisory board or the leader, have to understand some of these very basic elements.

We do speak from a space of understanding and knowledge as the trusted broker between the educator—in our case, the business community—and those mentors who actually provide that enrichment for students across Canada. I think that collaboration is absolutely essential. You have these four organizations before you today because we are so passionate about this. How you sequence it and who it is I think will actually be successful based on the relationships they have with the organizations beyond here.

In the past, Junior Achievement has not received any government funding from the federal government, not in its last 58 years. We see the need, and we're before you today because we see the need for a financial leader. I think that's germane to what you're asking.